Tillmann Fuchs and Miroljub Vuckovic, the management of the "official" Diagonale appointed by Austria's controversial Secretary of State for Arts Franz Morak, have cancelled the 2004 event and stepped down from their posts.
Their position has looked increasingly isolated for weeks. Their plans to introduce changes to the Diagonale had met with opposition from high profile Austrian directors and industry figures, and sparked moves to launch a rival "original" Diagonale.
"Adhering to our plans would lead to a further division within the film scene, which is not in the interest of anyone concerned with cinema", Vuckovic said in an official statement, adding that he would, "of course, continue to support and promote Austrian filmmakers and sincerely wished the film scene a productive future."
Fuchs, who suggested with Vuckovic that Morak "restore [the Diagonale] on a new platform in 2005", indicated that he will now dedicate himself to "new challenges in a more constructive environment."
Morak ruled out any chance of him providing financial support for the "original" Diagonale (3-7 March). He argued that this rival event was "organised differently" and "very anarchic", noting that "that's good that way and should also remain like that".
Morak revealed that in a discussion on Tuesday evening with the Federation of Film Trade Associations and the directors and producers' associations, he had called on them to draw up a concept for the 2005 edition of the Diagonale "in which the presentation of all of Austrian filmmaking is possible."
Asked to assess his handling of the Diagonale controversy in retrospect, he commented that "every person makes mistakes", but stressed that "the discussion process was an important one - for the [film] scene, but also for the decision-makers in the Secretary of State's office."
Morak was speaking at a press conference on Wednesday (Dec 17) to announce the appointment of 33-year-old Roland Teichmann, managing director of the Association of the Audiovisual and Film Industry, as Gerhard Schedl's successor as head of the Austrian Film Institute from May 2004.